City of Pontiac Policemen’s and Firemen’s Retirement System, et al. v. UBS AG, et al.

Case Updates

The court affirmed the judgements of the U.S. District Court for the Southern District of New York holding that Morrison precludes claims brought pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) by purchasers of shares of a foreign issuer on a foreign exchange, even if those shares were cross‐listed on a United States exchange.

NCLC urged the Second Circuit to affirm the order of the District Court, which correctly dismissed claims arising out of transactions on foreign exchanges. NCLC argued in its amicus brief that this case presents a critical - and impermissible - attempt to circumvent the clear restrictions on extraterritorial application of Section 10(b) of the Securities Exchange Act of 1934 established by the Supreme Court in Morrison v. National Australia Bank Ltd. NCLC explained the Court in Morrison adopted a bright line rule, grounded in the well-established presumption against extraterritorial application of U.S. law, that does not allow private actions under Section 10(b) based on transactions that take place on foreign exchanges or otherwise in foreign countries. NCLC pointed out that in the case of cross-listed securities, failure to adhere to Morrison's bright line rule risks significant injury to the competitiveness of U.S. capital markets. Exposing cross-listed issuers to U.S. class litigation based on non-U.S. transactions would create a substantial disincentive for companies to list their securities in our markets. NCLC further argued that by rejecting Morrison's territorial rule would also reduce the choices available to U.S. investors, who might otherwise benefit from the ability to purchase and sell cross-listed securities on a U.S. exchange.